Independent Contractor FedEx CC or FedEx Ground?
Joe came to us 12 years ago as a “One Truck Independent Contractor” leasing on as an Owner Operator with FedEx Custom Critical. Later Joe’s wife, Sue, became his co-driver. A few years went by when they saw an opportunity to help another driver get into the business. So they leased Tom their old truck as they then upgraded to a beautiful new unit for themselves. In short, Joe and Sue safely grew with 7 more trucks and drivers.
Now “Fleet Owners,” Joe & Sue called to say they wanted to give FedEx Ground a shot with one of their smaller units.
The operations of FedEx CC and FedEx Ground are similar regarding the ownership and maintenance of trucks, the recruitment of drivers and the requirement of NTL insurance. Here’s a quick look at some of the differences between the two:
- No designated route
- Fleet Owners classify Drivers as 1099 Independent Contractors
- *Drivers carry Occupational Accident/Work Accident Coverage
- Non-forced dispatch, Drivers can accept or reject loads
- Fed Ex Custom Critical is direct exclusive use “no touch” business freight
- Assets of trucks
- Designated route purchased by the Fleet Owner
- Fleet Owners classify Drivers as W2 Employees
- *Most Fleet Owners provide drivers with Worker’s Comp & other Health Insurance Options
- 7 day per week delivery operation requirement effective January 2020
- Fed Ex Ground includes home package delivery, P & D (Pick Up & Delivery) and Linehaul runs
- Assets of trucks AND Service Area ROUTE
*As always regarding insurance, state requirements may differ…follow FedEx advisement for your specific state.
In addition to the different requirements by FedEx Ground operations over FedEx Custom Critical, Joe and Sue shared that they also spent time learning about negotiating their ISP or “Independent Service Provider” contract.
They believe it was time and money well invested. By purchasing their service area “route” they now have an asset that can later be sold.
That route ownership is the key that often draws Independent Contractors to FedEx Ground, Home, P&D and Linehaul.
For a quick point of reference on value, here are examples of 2 routes recently for sale:
Bowling Green, KY
Listing Price: $275,000
Cash Flow: $78,909
Route Composition: 6 routes
Number of Trucks: 6 trucks
Listing Price: $1,499,000
Cash Flow: $344,855
Route Composition: 13 Routes/4 Runs
Number of Trucks: 14 P&D Trucks/7 Linehaul Tractors
Joe & Sue are starting out simple with a FedEx P&D or “Pickup & Delivery” route which operates during the day and does not require a CDL driver.
Since their cargo van driver wanted last mile delivery and short regional runs from one terminal, this seemed like the best place for them to start. Here’s more on why it’s a good idea to start with a FedEx P&D Route.
On the other hand we have a number of established insureds here at CIS who swear by FedEx LineHaul Runs due to the sheer profitability. These contracts require a tractor/trailer and generally operate beyond regional most of the time. So they are more similar to FedEx Custom Critical in that they often include team drivers on the road for long non-dedicated runs. However, I’m told there are some dedicated runs available… Here’s more on FedEx LineHaul.
Joe and Sue both emphasize that they and other Independent Contractors continue to do very well with FedEx Custom Critical. National Truckin Magazine just completed this bio on our client, Chris Cain of Cain Transportation LLC. For an inspiring success story, check it out!
FedEx CC drivers have a reputation for excellence with a loyal following as evidenced by the independent FedEx Custom Critical Friends page “The Trucking Couple” also offer helpful entertaining advice with their FedEx CC Business Model YouTube.
Because all FedEx divisions pre-screen candidates so well, Independent Contractors are rewarded for their excellence and receive “preferred premiums for professional drivers.”
I can also attest that compared to a generally high turnover rate in our industry, very few Owner Ops leave FedEx CC for other Motor Carriers. When they do leave, they’re retiring:)
Company culture? Their social responsibility program “FedEx Cares 50 by 50” is their plan to positively impact 50 million people by the 50th anniversary of FedEx in 2023. That’s impressive.
So FedEx CC vs FedEx Ground companies?
Well, Professional Drivers partner with Professional Motor Carriers…Joe & Sue will fit right in with both.
Shelly Benisch, TRS, CIC